The Strategist

Bombardier to cut 5 thousand jobs, sell two units

11/09/2018 - 14:01

Bombardier Inc. intends to sell two units for about $ 900 million and cut 5 thousand jobs, according to Reuters.

Alan Wilson
Alan Wilson
Shares of the company on Thursday fell by 26% due to the disappointing free cash flow forecast.

The Canadian manufacturer of aircraft and trains reported that it can achieve the target free cash flow in 2018 only using revenues of $ 635 million from the sale of a plant in Toronto. Analysts had expected Bombardier to achieve its goal, even without accounting for these revenues.

Bombardier’s Finance Director John Di Bert explained this by greater than expected working capital needs in the railway division.

This year, Bombardier had to invest more than expected in reserves for railway contracts. However, the company will receive the bulk of payments only after these orders are fulfilled, Bombardier’s spokesman told Reuters.

The cuts, which will affect more than 7% of Bombardier employees worldwide, will allow the company to save about $ 250 million annually by 2021.

About half of the cuts (2.5 thousand jobs) will be held in the Canadian province of Quebec.

The company also said it was selling Q400 turboprop aircraft to Longview Aviation Capital for $ 300 million. Bombardier also sells its training business to Canadian CAE Inc for $ 645 million.

A Longview statement said that work on the Q400 assembly site in Toronto will continue until at least 2021.

Earlier on Thursday, Bombardier presented a forecast that revenue in 2019 would increase by 10% to $ 18 billion or more, thanks to an increase in the supply of Global 7500 aircraft.

Adjusted earnings per share of 4 cents surpassed the forecast of 2 cents per share, according to Refinitiv.